Episode 116 – Enforcing a Non Compete Agreement
Enforcing a Non Compete Agreement
In today’s episode Mike coaches Darian Burns of All Clean and Clear Cleaninga https://www.facebook.com/cleanandclearnowanthem/ on enforcing a non compete agreement.
The technical answer to enforcing a non compete agreement: It depends on which state you are in. Arizona is a right to work state which means if you fire someone because they aren’t doing a good job, they can’t really sue you claiming discrimination. The flip side to that is the courts are generally going to say “hey, you can’t stop someone from working”
If their trade is cleaning, you can’t really tell them if they don’t work for you, they can’t work in their trade. Maybe if they are actively stealing your clients, but typically you are going to have a hard time enforcing a noncompete at least here in Arizona.
The REAL answer:
I wouldn’t spend any time on it whatsoever. I would have my employees sign something stating that if they do leave and start their own business that they won’t actively seek out and steal my customers.
The reason I would have them sign that is not legal is for their own mentality.
The reality of it is legally you are going to have a hard time forcing it. Even if you had an easy time enforcing it and you sue them and have a judge that is sympathetic to your situation and rules against them and orders them to stop how are you going to physically ensure that happens?
The cost associated with enforcing a non compete agreement in court is going to be around $5,000-$10,000 and that isn’t even factoring in the time and effort you have to put into a lawsuit.
Going even further, if the judge awards you money from that person you are now tasked with collecting the money from that person. The courts don’t do it for you. If you think it’s hard enough collecting from your customers, try collecting from a disgruntled x-employee who you just sued.
Ultimately the time, energy and money that a lawsuit sucks from your lifeforce negatively affects your ability to focus on your business, your customers, your core values and just isn’t worth it.
BONUS TIP: Just assume you are never going to be able to enforce a noncompete
Now that we have that out of the way here’s the good news; the passion, planning, work and effort to start, maintain and grow a business is a very different skill from being a good cleaner.
You may have an employee that is a good technician and thinks because they can clean they can start a cleaning business, but they have no idea what it takes to build a successful business and usually will get overwhelmed and fizzle out quickly and come back looking for work. So it’s best to let reality worry about enforcing a non compete agreement rather than you.
Another way to not have to worry about losing customers is to have a good client attraction system so you constantly have good leads coming to you every month so even if you lose a couple of customers you have 2-3 to replace them right away.
BONUS TIP: An employee can’t steal a client. A client chooses to leave you and go with someone else because they think that person can bring more value to their lives than you can.
The best way to combat that is to have a good relationship with your clients and provide them with a service they wouldn’t want to undercut for price.
You choose how much how much an employee leaving you and competing with you with you hurts you.
A lot of time we will throw good energy after bad because our feelings are hurt. But the best way to go about it is to frame it correctly in your mind. You only want employees that are interested in your business, who share your core values. That employee leaving was a good thing! An employee who isn’t happy where they are at can be a cancer in your company that can spread to other employees.
BONUS TIP: You choose the “price you pay”
Spen 0% of your time worrying about what that employee did to you, and 100% of your time focusing on hiring good employees, providing excellent service to your customers and upping your game.
Know your customer’s pain
Take time out for your family